Discover the seven best cryptocurrency ETFs to buy in 2024. Learn about top options like iShares Bitcoin Trust and ProShares Bitcoin Strategy ETF and understand their benefits and limitations.
7 Best Cryptocurrency ETFs to Buy in 2024
Are you looking to diversify your investment portfolio with the cutting-edge potential of cryptocurrency without diving into the complexities of self-custody and exchanges?
Then, the cryptocurrency ETFs might be the perfect solution for you.
Cryptocurrency ETFs provide a streamlined way to gain exposure to digital assets without the complexities of managing self-custody.
These funds build on the foundations of Bitcoin-futures-based ETFs and closed-end funds holding spot Bitcoin, offering an accessible path to diversify your portfolio.
The Evolution of Cryptocurrency ETFs
The introduction of spot Bitcoin exchange-traded funds (ETFs) in January marked a significant milestone, paving the way for a variety of new products. These ETFs follow earlier Bitcoin-futures-based ETFs and closed-end funds holding spot Bitcoin.
Cryptocurrency ETFs track the price of individual cryptocurrencies or a group of them, making them a low-cost, diversified option that simplifies exposure to the crypto market.
In May, the SEC approved applications for spot Ethereum ETFs, indicating further growth in the ETF industry.
The latest developments include potential spot Solana ETFs, with filings from asset managers like VanEck and 21Shares now under regulatory review. This growing intersection of crypto and ETFs offers investors numerous options for market exposure.
The Benefits of Investing in Cryptocurrency ETFs
Investing in cryptocurrency ETFs allows you to bypass the challenges of self-custody and cryptocurrency exchanges. These ETFs can be traded like regular stocks on brokerage apps and held in tax-advantaged accounts such as Roth IRAs. Over time, more financial accounts have included routes to hold crypto assets, broadening access to Bitcoin and other cryptocurrencies.
However, cryptocurrency ETFs have their limitations. They are restricted to traditional trading hours, unlike direct-access platforms that offer round-the-clock trading. In addition, when withdrawing assets for retirement, ETFs must be sold for dollars and distributed, while direct-access platforms provide more flexibility.
Seven Best Cryptocurrency ETFs to Buy in 2024
1. iShares Bitcoin Trust (IBIT)
- Expense Ratio: 0.25%
The iShares Bitcoin Trust (IBIT) has quickly become a popular choice, amassing over $17.3 billion in assets under management (AUM). This spot Bitcoin ETF tracks the CME CF Bitcoin Reference Rate – New York Variant by securely holding Bitcoin. It ensures ample liquidity with a low 30-day bid-ask spread and a competitive expense ratio.
2. ProShares Bitcoin Strategy ETF (BITO)
- Expense Ratio: 0.95%
The ProShares Bitcoin Strategy ETF (BITO) was the first U.S.-listed, Bitcoin-linked ETF. While it does not hold spot Bitcoin, it offers a high correlation to Bitcoin prices through derivatives known as Bitcoin futures. Actively managed, BITO constantly buys and sells CME Bitcoin futures contracts, providing synthetic Bitcoin exposure and periodic income distributions.
3. Roundhill Bitcoin Covered Call Strategy ETF (YBTC)
- Expense Ratio: 0.95%
The Roundhill Bitcoin Covered Call Strategy ETF (YBTC) generates monthly income through a covered call strategy on Bitcoin. It combines a long call option and a short put option on BITO for synthetic long exposure while selling covered calls to generate income. YBTC offers a unique blend of income generation and Bitcoin exposure without the complexities of direct Bitcoin investment.
4. Global X Blockchain ETF (BKCH)
- Expense Ratio: 0.50%
The Global X Blockchain ETF (BKCH) focuses on crypto-related stocks, including miners and crypto exchanges. Its portfolio consists of 25 crypto industry stocks, such as Coinbase, Riot Platforms, and Marathon Digital Holdings. This ETF provides indirect exposure to the cryptocurrency market through blockchain-related equities.
5. VanEck Ethereum Strategy ETF (EFUT)
- Expense Ratio: 0.66%
The VanEck Ethereum Strategy ETF (EFUT) offers exposure to Ethereum through future Ethereum contracts. EFUT holds a portfolio of Treasury bills leveraged as collateral for future agreements with CME Ether. Structured as a C-corporation for tax efficiency, EFUT provides a modest yield and remains a solid option until spot Ethereum ETFs officially launch.
6. ProShares UltraShort Bitcoin ETF (SBIT)
- Expense Ratio: 0.95%
The ProShares UltraShort Bitcoin ETF (SBIT) offers a way to bet against Bitcoin. It aims to deliver a daily return two times the inverse of the Bloomberg Bitcoin Index using CME Bitcoin futures and swaps. This inverse ETF is designed for short-term positions, as its daily reset can lead to unexpected results over more extended periods.
7. ProShares Ultra Bitcoin ETF (BITU)
- Expense Ratio: 0.95%
For those bullish on Bitcoin, the ProShares Ultra Bitcoin ETF (BITU) provides leveraged exposure. It seeks a daily return two times the Bloomberg Bitcoin Index through CME Bitcoin futures and swaps. While BITU offers amplified returns, it is highly volatile and best suited for short-term trading due to the risks of long-term holding and compounding.
Final Verdict
Cryptocurrency ETFs offer a convenient and diversified way to enter the digital asset market. Whether you seek income, leveraged exposure, or straightforward investment, these seven cryptocurrency ETFs provide various options to suit different investment strategies. Consider expense ratios, underlying assets, and personal risk tolerance when selecting the best ETF for your portfolio.
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